The FTSE 100 paused for breath on Monday with no new catalysts to spur another leg higher in London’s leading index. 

T”he FTSE 100 was probably due a pause after a breathless period which has seen it mark record after record and Monday morning saw the index take a seat,” says AJ Bell investment director Russ Mould.

The index broke to fresh highs last week after the Bank of England signalled it would cut interest rates soon, and the UK exited recession with 0.6% GDP growth in Q1.

The FTSE 100 has outperformed its US counterparts over the past month, with miners, banks, and housebuilders driving a cyclical rally.

Now the Bank of England looks set to cut interest rates in the near future, the melt up in stocks may have to face a more stringent test. Global growth. 

Lower rates will help spur growth, but both the Bank of England and Federal Reserve may only cut once this year, so the real-world impact will likely be fairly muted should they walk that path.

“Some caution is creeping back in, amid concerns that high interest rates may have to linger for longer in the United States, with the key CPI inflation reading expected this week,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

Softer data from China took the wind out the miners on Monday which contributed to a slower session. “China’s economic recovery has hit another bump in the road, with the latest data showing scant progress,” Streeter said.

Rio Tinto fell 0.9% while Glencore was flat and Anglo American eeked out a 0.3% gain.

Diploma was the FTSE 100’s best performer, jumping 4% as adjusted operating profit soared 14% in the recent half year.

“One of the FTSE 100’s lesser lights – specialist distribution business Diploma – was taking its moment in the spotlight as it lifted annual guidance,” Russ Mould said.

Long-suffering BT shareholders will be adopting the brace position for full year results due to be released this Thursday.

The stock has been an unmitigated disaster for investors, who have seen declines of 31% over the past year and a share price approaching levels not seen since the company was listed in the 1980s.

Meaningful growth has been elusive for the company in recent years, and 2024 results aren’t going to break the trend of tepid earnings updates.

Investors will be looking for growth in the number of retail and business customers at EE as the company continues the rollout of its fibre network.

BT’s fiscal 2024 results are expected to show growth in both sales and adjusted EBITDA. Consensus forecasts point to a 2.1% increase in sales to £20.9bn for the 2024 full year. Adjusted EBITDA is projected to rise 2% to £8.1bn during the full-year period.

This isn’t bad, but it’s not good by any stretch.

For 2025, analysts anticipate even slower growth, with a consensus of a 0.8% gain in sales to £2bn and a 1.4% increase in adjusted EBITDA to £8.3bn.

BT expects £5bn in capital investment for fiscal 2024, down from £5.3bn a year ago, as the company guides for fiscal 2024 free cash flow in the range of £1bn to £1.2bn, lower than £1.3bn in the prior year.

The only thing BT really has going for it is the dividend, which is expected to be maintained at 7.7p. It must, however, be noted that BT has cut its dividend in recent years, so the current yield is far from secure if performance doesn’t pick up.

Three AIM-listed junior miners in particular have caught our attention: CleanTech Lithium (LON:CTL), Cadence Minerals (LON:KDNC), Power Metal Resources (LON:POW).

There is a huge disconnect between the valuation of some AIM-listing mining companies and their underlying fundamentals. Many companies have made extraordinary progress over the past two years, but this progress has not been reflected in their share prices.

The disconnect results from overarching macroeconomic influences and the general sogginess surrounding UK plc. Mining companies have been hit particularly hard by higher interest rates and the cost of living crisis which have sucked the capital available for juniors out of the market. 

This, however, could all be about to change should the Bank of England cut rates this summer, enhancing capital flows amid improving sentiment around UK assets.

We highlight three AIM shares that will likely benefit from the return of capital to London’s junior markets as investors snap up undervalued, higher-risk shares. 

Cadence Minerals

Cadence Minerals is a real head-scratcher. The mining firm’s flagship Amapa iron ore project, located in Brazil, was once valued at over $600 million by Anglo American. 

Cadence, with a market cap of just £7m, holds a 33.6% equity stake in the project and is working towards the recommencement of production.

Of course, it is too simplistic a valuation exercise to assume Cadence’s stake is worth 33.6% of the amount Anglo American once accounted for on its balance sheet. It does, however, provide us with an idea of the project’s scale and its future potential.

The Amapa iron ore project already has much of the infrastructure required to recommence production in place.

In early 2024, Cadence Mineral announced it was working towards a revised Amapa PFS economic model after an optimisation study revealed the potential for higher production rates and lower costs.

The prior PFS highlights include a post-tax NPV of $949m using a 10% discount rate, a post-tax IRR of 34%, and a life of mine average annual EBITDA of $235m.

One would expect these already attractive metrics to improve in the revised PFS, further underpinning the value held in the Amapa iron ore mine.

Cadence has several other investments, including a stake in European Metal Holdings, Evergreen Lithium, and the Sonora lithium project in Mexico. 

While these all have the potential to create value for Cadence Minerals shareholders, many will see them as a sideshow to Amapa, which is the main event for many investors. 

CleanTech Lithium 

Investors seeking an exciting, well-run lithium pure play will be hard pressed to find a better option than CleanTech Lithium on London’s markets.

CleanTech Lithium operates in the globally significant lithium triangle located in South American spanning Argentina, Chile, and Bolivia. CleanTech’s neighbours are the world’s largest lithium miners extracting lithium from the world’s biggest discovered lithium deposit.

The company is focused on the development of lithium brine assets in Chile. It has has two core license zones in the Chilean salt flats with a combined resource of 2.7mt of lithium carbonate. Laguna Verde is the standout license holding 1.8mt of lithium carbonate and the Francisco Bay license is estimated to hold a resource of 0.9mt.

The Llamara project provides additional exploration potential but hasn’t yet been developed to the scale of Laguna Verde or Francisco Bay.

It is a particularly interesting time for CleanTech Lithium shareholders as work to incorporate recent drilling results and direct lithium extraction (DLE) data into a Laguna Verde PFS gathers pace. The company said it is targeting a PFS release date in Q3 2024 which promises to be a pivotal moment for the company.

There have been problems with and the general softness in lithium markets and uncertainties around the Chilean government’s approach to lithium asset. However, these setbacks served to create a potential buying opportunty with the stock trading marginally above 20p valuing the company at just £30m.

Power Metal Resources 

Power Metal Resources is a one-stop shop for mining investors seeking broad exposure to a range of precious, base, and battery metal exploration assets.

The company has carefully curated a portfolio of early-stage mining assets, including lithium, gold, copper, nickel, PGEs, and uranium.

Power Metal Resources’ strategy is to develop mining assets with a view to eventually crystallising the value through IPO, farm-outs, or disposal. The successful IPOs of First Class Metals and Golden Metal Resources have validated the strategy.

Golden Metal Resources has done exceptionally well since listing at 8.5p to trade at 14.9p. Power Metal Resources retains a 53% stake in Golden Metal Resources, worth around £7.5m at current market prices.

Considering that Power Metal Resources has a market cap of £14.6m, the value attributed to the rest of the portfolio stands in the region of £7m, which is clearly ludicrous given the quality of the assets.

Such is the confidence in Power Metal Resources held by some UK high net worth individuals and a Saudi Arabian strategic investor, the company secured funds by way of a placing at a premium to market prices in February.

Power Metal’s recent additions to the bank of mining assets include an earn-in agreement for the exploration of Saudi Arabian tenements, which is thought to be prospective for lithium, nickel, copper, and molybdenum. Power is contracted to contribute $350,000 towards exploration for 20% ownership of the 15 tenements.

The company has invested heavily in uranium with assets in Canada and Australia and is exploring the listing of their subsidiary, Uranium Energy Exploratio, in London.